Softbank and Saudi Arabia’s PIF to Form $100BN Tech Fund

Softbank aims to invest about $20 billion a year in tech startups around the world for the next five years. Image Credit: TechCrunch

Japanese telecommunications giant Softbank will pour $25 billion of its own money into a new global tech investment fund. To be based out of London, UK, the fund – with a working title of the ‘Softbank Vision Fund’ – will also receive up to $45 billion from the public investment fund of Saudi Arabia.

The Riyadh-based Saudi PIF recently invested $3.5 billion into Uber, the ride-hailing platform. By investing in the Softbank general global tech fund, it seeks to globalize and diversify the kingdom’s investments, the Saudi PIF stated.

Softbank affirmed it has signed a non-binding memorandum of understanding with the Saudi PIF that commits the latter to “becoming the lead investment partner”. Arabic to Japanese interpretation services professionals were on the scene to help hammer out the details of the memorandum of understanding.

The Japanese company also signaled that “a few large global investors” are exploring the option of participating in the fund, which is set to be capped at the fund size limit of up to $100 billion.

The fund’s investment period will last five years, which means it will potentially invest $20 billion into tech startups around the world each year. This amount dwarfs Greylock’s newly formed $1 billion fund.

With the formation of the fund, given its global scope and size, Softbank is betting on becoming a considerable force in tech investment in the short run. Softbank CEO Masayoshi Son remarked the company’s goal is to become “the technology sector’s biggest investor” over the next decade.

The Japanese telecommunications firm has recently sought to diversify its investments, wrapping up a GBP 24 billion purchase of British semiconductor firm ARM Holdings last month, a company developing the Internet of Things.

Earlier Softbank investments include web-based companies, such as Yahoo Japan and ecommerce giant Alibaba, and of late the U.S. telecommunications company Sprint.

It recently began investing in mobile gaming-related companies as well, though there are rumors it is reconsidering its activities in the field. Observers note it may soon sell its shares in Supercell to Chinese tech giant Tencent. This past summer Softbank also sold the vast majority of its shares in games company GungHo for $685 million.

Softbanks has stated its goal with the new tech fund is to accelerate the pace of its global growth strategy.

“The Fund will make investments drawing upon [Softbank Group]’s investment proficiency, operational expertise and breadth of experience in the technology sector,” it stated.

According to TechCrunch, the fund will be spearheaded by Rajeev Misra, SoftBank’s head of strategic finance.